AMITIAE - Friday 25 January 2013
Cassandra - Friday Review: The Weekend Arrives
By Graham K. Rogers
Opening Gambit:Apple's financial figures, comments, mayhem, despair. Digitimes retracts, bloggers do not. What is really behind the share price manipulation: is Apple fragmentation the end target? Cook on the future: hints and raised eyebrows, but few facts. Why Mac sales were lower: we were warned. 36 new LTE carriers. iPads in education. Intel to stop making desktop boards. Download to Win 7 costs how much? The surface costs how much? A trap for online journalists: failed.
Apple Q1 2013 Financial Report and Other StuffI just do not understand the financial markets, although a Tweet today helped me put it into some context and confirmed what I thought: "Stock isn't a scoreboard. It isn't a measure of success. It's a bunch of banks gambling 1000 times a second with computers. STOP CARING" (Rob Beschizza).
Apple released its results overnight (my time) and I put something online about the figures early morning from the Press Release, with some basic comments: income up, profits stable, 47.8 million iPhones sold (up), 22.9 million iPads (up); also 4.1 million Macs (down), and 12.7 million iPods (down). This was all pretty much expected. Next quarter Apple anticipates between $41 billion and $43 billion income. Most of the facts I used came from the Apple Press release.
Immediately the shares dropped and headlines such as Peter Svensson's, "Apple Q1 2013: Apple's Profit Rocket Hits Air Pocket" ignored the income and the fact that Apple is the most profitable company ever, but has his nose firmly against an imaginary brick wall, that ignores the long term life of the company. With the focus on doom, he was unable to find his way to the positive point about record income until the fifth paragraph. A look at the share prices including a graph is included in an article on Patently Apple who also include figures from the announcements. A point is also made that many miss that the quarter a year ago which is being compared, had 14 weeks rather than 13, so that $13.1 billion is better than last year.
Like me and some other long term Apple observers, Kate MacKenzie on Mac360 makes the point (again) that Apple is not a failing company - far from it - Wall Street has changed the rules of the game. . . . Record revenue, record profits, record product shipments just don't mean what they used to mean.
She is also critical - as we have been many times in the past - about the way Apple good news is often underplayed as that does not fit the narrative that the pundits are working on at the time, such as
No one wants to talk about the fact that the iPhone line outsold the Android line in the U.S. by about 2 to 1. Wall Street can't mention that because it doesn't fit the Samsung-is-the-new-Apple narrative.
On the same theme are comments from Chris Umiastowski on iMore who looks at what Wall Street is up to (see also my comments below) and has some interesting quotes from those who might really know better.
Another comment and link from John Gruber picks up on comments from 2004 from Steven Levy, "when they should have gone for market share, they went for profits" and that is still the case. Does Wall Street actually understand what running a company means?
Part of the clue as to why the drop occurred was in a sub-heading in an article by Josh Lowensohn, who headlines the record figures, then adds . . . "the company missed Wall Street's expectations on revenue" which is what we have seen before. They expected Apple to predict a higher figure: this is like a futures market for IT.
The analysts who prove over and over again that they really do not understand Apple by wrongly estimating the figures, go crazy when Apple reaches its own estimates, but miss theirs. Who is running Apple: Wall Street? Thank goodness they aren't with the displays of recklessness that have been seen in the last few years.
Even AppleInsider made a rare move to the negative, or at least the neutral, when their headline emphasised the "flat" earnings before the record figures and they used exactly the same PR fact sheet as me. Rene Ritchie on iMore had a more positive article and focussed more on the comments which are always sifted for significance.
Actually, maybe that is part of the clue as to what Wall Street wants. If the share price is depressed enough, as well as making it cheaper to buy, that could make it possible for large investors to take control, or at least have some level of persuasion. If that were so, the board could be influenced. And if at some time in the future a new chairman were installed, that could lead to a breakup - already hinted at in some sources. After all the components of a company such as Apple are worth far more when hived off and there are plenty who are short-sighted enough to do this for short-term gains.
As well as iMore, AppleInsider had a lengthy note on comments made at the Financial report. This is sectionalised for easier analysis.
The fewer Macs sold caused some ripples, although it was less of a drop than PC makers experienced. One reason for this drop was production difficulties with the iMac and Apple warned about this. Kevin Bostic on AppleInsider has a look at the supply constraints problem with these machines, including comments from Peter Oppenheimer and Tim Cook.
A report by Donna Tam reveals Tim Cook's evasiveness on the Apple TV question asked by Gene Munster (who has a thing about this) and the point that the answers seem to be the same as he gave last year to the same question (and questioner).
Another comment, reported by Daniel Eran Dilger on AppleInsider, concerned the rollout of LTE (4G) when Tim Cook mentioned the expansion from a current 24 carriers with 36 new LTE carriers joining its existing pool: Italy, Denmark, Finland, Switzerland, Philippines were named, and also several middle eastern countries. With the comments by the CEO of AIS last week, we wonder if Thailand will now be left off. Another source with similar information about Apple and LTE carriers, is Jeff Gamet on The MacObserver.
Also on education, AppleInsider examines the Boston Globe school program that has now switched from paper to iPads: its Newspaper In Education program will provide Apple iPads with digital subscriptions to the publication in Massachusetts public schools. This has been made possible by using $65,000 of vacation donation funds from Globe subscribers.
Half and HalfA bit of a shock in some ways came when I read the report from Brooke Crothers that Intel was to pull out of the business of making desktop circuits. However, as I thought about it, the effect on Apple and its MacPro may be less as Intel only makes the processors: Apple designs the boards themselves and they are not off the shelp, Phantip Plaza specials. Of course, the decision will also affect Phantip Plaza and other such places as there would have to be a serious restructuring if the stock carried in such places. Or AMD?
Other MattersAnother shock, at least to me as a long-term Mac user, who always buys the latest version of OS X, was a picture I linked to with one of the most arrogant and nonsensical offers I have seen. The image on Jury Me depicts an offer to users of Windows 8 who want to downgrade to Windows 7 (itself a significant move, not boding well for Redmond), but the users were then asked to fork over $125 for the - presumably - lesser and out of date product. As a note, the latest version of OS X is $19.99 and a full version comes with every Mac. A version developed originally from OS X and specifically for smaller devices, like the iPad or iPhone comes free with those devices. Think, guys. You pay for a downgrade?
For $1018 the Surface is one of the best advertisements for the iPad I have ever seen. This is also the view taken by Rene Ritchie on iMore who writes that the "Surface Pro tablet pricing, makes us appreciate Tim Cook all over again". Note also his comparison of the MacBook Air, when he writes, "If an iPad isn't enough, and a MacBook Air is too much" then the Surface might work (for some, I guess if they have cash to throw away) suggesting that there is more space on the MBA than Burns was willing to admit.
Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs.
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